Continental India MD gives a peek into readiness for BS-VI and new safety norms

The local unit of 44.4 billion euro Continental AG is set to turn the tide of transition in its favour. The leading component maker has started mass production of new safety components like ABS, ESC and airbags to increase its content per vehicle. In an interview with ETAuto Prashanth Doreswamy, Managing Director & Market Head - Continental Automotive India, informed that it has locally developed a replacement for carburetor technology. The new product is a BS VI-compliant product ML4 which will be an electronic fuel injection (EFI) system for two-wheelers. He also asserted that the company is ready to commence the supply of BS-VI complaint parts in five months. Edited excerpts:

Q. Can you share the details of your upcoming BS VI products?We are already a supplier of powertrain components in India. For BS VI, our focus will be more on two-wheeler segment which is a wide market here. As a replacement for carburetor technology we are offering a locally developed a BS VI-compliant product ML4 which is an electronic fuel injection (EFI) system for two-wheelers.

This will be a prime business where we will be investing aggressively. Currently we are waiting for vehicle evaluation of this system and will start ramping up from Q3 of FY19-20. The deliveries of EFI to OEMs will start from 1st April 2020.

Other than this, we are introducing Pocal Nox sensors to increase the efficiency of diesel engines in cars and commercial vehicles. These are very high technology products which will be localized in Pune greenfield facility.There are some products like catalytic filters, high temperature sensors and general purpose actuators which we are manufacturing in low volumes as of now. These components will help in enhancing the efficiency of the vehicles. We see a multifold hike in the demand of these products with BS VI implementation, which will push our revenue massively.Q. What's the timeline for the dispatch of your BS VI products?We have completed the validation of most of our BS VI products and are also ready with the manufacturing capabilities from our side. We are ready to dispatch the first lot of our BS VI products from October.

But since these products will add up to the final cost of products, OEMs are asking us to slightly postpone the deliveries to a little later date. But that doesn't cause any harm to us, as we know that the transition is inevitable and OEMs have to embrace it before April 1, 2020.Q. As you said that the demand of some products is going to intensify in the coming months, how are you modifying your manufacturing capabilities to meet this increased demand?From the modification perspective we are planning to bring two plants that we have in Pune together where we will begin the production of upcoming BS VI-compliant products like EFI systems, NOX sensors and AI temperature sensors.

About 20 per cent of made in India cars have more than four airbags and this number can go up to 12.Prashanth Doreswamy, Managing Director & Market Head - Continental Automotive India

Our green field facility in Talegaon near Pune is a 20 acre facility built with an investment of Rs 240 crore has the option of future expansion. We began the construction of this plant in January this year and it will start operations in Q2 of 2020. In the second facility we have invested Rs 200 crore where we are carrying out the manufacturing existing products.

Q. Auto industry is in slowdown phase, how this affecting your business?Certainly, this is a challenging time for all of us be it OEMs or Tier I. What's helping us in this turmoil phase is our high investment on new technologies and future readiness. For instance, post BS VI there will be implementation of Real Time Drive Emission (RTD). For this we are ready with regulated fuel delivery module which will help in achieving optimisation of fuel supply.

Q. Is your localisation plan facing any glut because of the slowdown?Not at all, last year we have made an announcement of investing very high triple digit rupees crore in India between 2018 and 2019 and we are on track. We have already invested close to Rs 520 crores in the two greenfield projects in Pune. Plus, we are ramping up the tech centre in Bangalore where we have employed around 4,000 people.

We have already achieved a high level of localisation in India some of our products like our anti-lock braking system (ABS) in which we have invested three years ago. Today, we are able to build up 2.4 million of ABS capacities for both two- wheelers and four-wheelers. We are also making electronic system control (ESC) units here and exporting a small amount of it as well.

As a part of vertical integration we have invested in manufacturing of electronic control units (ECUs) for both ABS and ESC. Going forth, we have a localisation plan lined up for motors as well. So, considering all these activities I don't think we are stepping back on our investments and localisation plans.

Q. There's a lot of buzz about 100 per cent switch over to electrification for two –wheeler (upto 150cc) and three wheeler, do you think this plan is feasible for India?We strongly feel that a complete transition to electric vehicle in a short period of time will be a challenge for India. As a global solution provider for electric mobility we believe that by 2030, EVs could be 30 per cent of the global vehicles. About 30 per cent will happen in the form of hybrid technology. Still there will be 40 per cent of vehicles powered by internal combustion engines (ICE) plying on the road.

Now any new transformation comes with added cost. So unless some real disruption happen which can bring down the cost, we still feel that full transition will remain a challenge for India.

Q. How is the demand for products becoming mandatory from government side like ABS, versus those you have voluntarily launched?There are a lot of features and new technologies which are driven by consumer preferences and awareness. As people are gravitating more towards safety oriented products, we see a substantial demand for our products which are not yet mandatory in India.For instance, about 20 per cent of made in India cars have more than four airbags and this number can go up to 12. Similarly, more than 10 per cent of the cars are fitted with ESC unit as a feature which will be made mandatory around 2022. So, preferences for these additional safety features are helping us in increasing our content per vehicle and we are seeing swift growth in their demand.